PE Threshold for Business Profits in E-Commerce Context-To what extent does the present Permanent Establishment threshold influence the taxation of Electronic Commerce cross-border transactions?

Abstract: Issues related to attribution of profits already exist in the traditional economic framework and are of a different nature, however these issues seem to become more bothersome in transactions conducted in e-commerce context, with an electronic economy. The matter is similar to the traditional economic problems in regard to transfer pricing adjustments; however these issues are much more complex due to the e-commerce nature, especially when considering the fact that multinational enterprises may gather data from different jurisdictions, and for different purposes, which makes the tracing of the source of the data highly complex. These possibilities for MNEs to collect, "analyze and monetize data", make the transfer pricing adjustments difficult in cross-border transactions, as the process of "analyzing functions, assets and risks", becomes much more complex to assign an objective value to the raw data itself, in relation to the processes used to collect analyze and use the data, and the costs attributable to the includible income are much more difficult to be assessed proportionally to the jurisdictions at hand, as determining the income produced and the deductible expenses incurred for such income in e-commerce is difficult, especially in regard to the tax planning strategies in terms of intra group cost allocation. These and similar issues will be addressed from this paper, mainly in Chapter four. Beforehand the thesis will present collected data from the digital industry and its growth, supplemented by a theoretical approach in Chapter two, where doctrinal debates in regard to international taxation principles are presented. Relevant information in regard to different interpretations from different jurisdictions are presented, in the preceding Chapter. These divergences amount to double or non taxation possibilities. This paper does not intend to provide solutions out of the scope of present law, but it rather analyses the present international taxation framework in regard to the permanent establishment threshold in e-commerce context, and it presents the differences in interpretation, and the results derived from such differences.